January-Report - page 5

January 2013 CBA REPORT
l
5
cover article
T
T
he key to effective communication
in the courtroom, and in busi-
ness, can be summarized in one
simple message: know your audience.
The United States Department of Justice
(DOJ) and Securities and Exchange
Commission (SEC) had a target audience
for their recently released guidance con-
cerning the Foreign Corrupt Practices
Act (FCPA); compliance officers.
On November 14, 2012, the DOJ and
SEC released “A Resource Guide to the
U. S. Foreign Corrupt Practices Act.”
1
The Resource Guide, which had been
anticipated for over a year, represents the
DOJ’s and SEC’s attempts to clarify key
provisions of the FCPA and to provide
operating principles for businesses con-
fronted with FCPA compliance issues.
The Resource Guide provides no
ground-breaking material. It combines
materials from three sources: long-held
SEC and DOJ positions about enforce-
ment of the FCPA, case law highlighting
previous FCPA decisions and a gener-
ous sprinkling of government victories
detailing FCPA actions against violators.
These sources highlight the legal mine-
field that is the Foreign Corrupt Practices
Act.
Definition Provided by
Resource Guide
One of the most sought after and
anticipated contributions of the Resource
Guide is the clarification of definitions of
key terms in the FCPA. These clarifica-
tions had been requested by the United
States Chamber of Commerce and 30
other industry representatives in a 2010
Chamber Report
2
and a February 2012
letter to the DOJ and SEC.
3
Gifts,Travel, Entertainment and
Other Things of Value
The Resource Guide confirms that
items of nominal value, such as cab fare,
reasonable meals and entertainment
expenses and company promotional
items are “unlikely to improperly influ-
ence an official and, as a result, are not,
without more, items” that result in FCPA
enforcement actions.
4
The DOJ/SEC did
provide a warning that “widespread gifts
of smaller items” may be part of a pattern
of bribes and may violate the FCPA.
5
The government confirmed that it
would continue to investigate improper
travel expenses, and that travel that has
no apparent business purpose, could
place individuals and corporations under
FCPA review.
6
The Resource Guide
specifically warns of situations where a
company provides travel and entertain-
ment expenses for foreign customers
to popular tourist destinations in the
United States when, in reality, no train-
ing occurred on the trips and where the
company had no training facilities at
those locations.
7
Foreign Officials
One of the most widely requested
clarifications of the FCPA was what con-
stitutes a “foreign official.” The DOJ and
SEC says in the Resource Guide that the
FCPA should be broadly applied to cor-
rupt payments to any officer or employee
of a foreign government and to those act-
ing on the foreign government’s behalf.”
8
Therefore, the FCPA covers “low-ranking
employees and high-level officials alike.”
9
While one factor is not dispositive or
more important than another when eval-
uating whether an individual is a foreign
official, an entity is unlikely to qualify
as an “instrumentality” of a foreign
government if the government does not
own or control a majority of the shares in
that entity.
10
The Resource Guide list of
factors that will be considered in deter-
mining whether an entity constitutes a
“instrumentality” includes:
11
• The foreign state’s extent of owner-
ship of the entity;
• The foreign state’s degree of control
over the entity (including key officers
and directors);
• The foreign state’s characterization
of the entity and its employees;
• The circumstances surrounding the
entity’s creation;
By W. Kelly Johnson
Understanding the Resource Guide to the
U. S. Foreign Corrupt Practices Act
The SEC and DOJ admit that a company’s failure
to prevent every violation does not necessarily
mean that a compliance program is not effective.
1,2,3,4 6,7,8,9,10,11,12,13,14,15,...36
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